FCC could be a bit more open to Sprint purchase of T-Mobile

posted by Alan F. / May 15, 2014, 12:46 PM

Commissioners on the FCC from the Democrat side of the table, might have opened the door a crack to allowing in the idea of a Sprint purchase of T-Mobile. Previously, FCC Chairman Tom Wheeler said that he was skeptical about allowing such a deal to proceed. But that was back in February. Now, Democratic Commissioner Jessica Rosenworcel is talking to people on Wall Street and in the wireless industry, telling them that Sprint and T-Mobile might not survive without a deal.

That line of thinking might revive hopes in the SoftBank/Sprint camp. Even though Sprint chairman Masayoshi Son had been rumored to be moving ahead on the deal, the pace had been glacial since the feeling was that the FCC or DOJ would block it anyway. But even though there is apparently a crack at the FCC, the DOJ still would have to sign off on the deal, and so far that would appear to be unlikely. Right now, negotiations between Sprint and T-Mobile concerning a break-up fee are said to be holding up further movement. Son is mindful of giving T-Mobile too large a fee, if Sprint has to pull out of a signed deal. T-Mobile scored $3 billion in cash and some useful spectrum when AT&T had to pull out of its deal to buy T-Mobile in 2011.

While the FCC is planning on holding some spectrum for Sprint and T-Mobile during next year's auction, an indication that the agency recognizes the challenges they face in taking on Verizon and AT&T, it is not apparent that they buy the argument from the two carriers that they need to merge to compete. What makes this argument a little hard for the government to believe is the strong showing recently by T-Mobile. The upstart carrier has used a number of innovations to snatch up new customers who have been leaving the larger mobile operators. Led by CEO John Legere, T-Mobile is on track to pass Sprint to become the third largest carrier by next year.

Posts: 64; Member since: Mar 15, 2013

posted on May 15, 2014, 2:52 PM 2

Posts: 105; Member since: Oct 29, 2009

Not so much. They don't have to run lean for a long period of time. After the ETF promo is done with they will not be running at a loss. Remember as long as you have cash your company is fine even if it is running at a "loss". TMobile is doing exceptionally well. Would have preferred to see Sprint wither and die.
I have been on Verizon, Sprint, and now with TMobile. 1st one was too high priced for me, second was shady and overall crappy (data speeds and customer sevice were sub par), third one has been great so far.

posted on May 15, 2014, 7:14 PM 2

Posts: 832; Member since: Mar 08, 2009

Not only that, the real problem with T-Mobile is that they are gaining all of these customers at a huge expense. TMO is giving away the farm with very aggressive promotions and pricing in order to achieve this, which cannot be sustained much longer.
It's only a matter of time until Sprint/TMO merge, it's the only way they will be able to effectively compete with the duopoly. Based on the successful turnaround in Japan with Softbank, I think Son knows exactly what to do to create a viable competitor with AT&T and Verizon while reducing prices with Legere at the helm which will benefit consumers. Son also has the money and has publicly reiterated his commitment to make Sprint the best network in the US. As much as people bitch about the old Sprint network, the new network rebuild from the ground up and a serious commitment to Spark and next year's auction of 600mhz spectrum, Sprint is on it's way to accomplish this which obviously benefits consumers as well.

posted on May 15, 2014, 7:20 PM 1

Posts: 537; Member since: Feb 17, 2014

Not true. Back in the day (early 2000's) Verizon was running promotions galore. They'd pay you to invite people, and not just one time, but every month (if I recall correctly it was $5/month per person)! I remember people in my community going to everyone they know, trying to sign people up. They were throwing everything they could at the consumer to get them to come to Verizon. Look at them now.. #1 carrier by size. And at that time they had absolute CRAP coverage. This goes to show that with patience, change can come. Especially how T-Mo has better coverage today than Verizon had then, has more resources, and perhaps even more finances. Back then, everyone was also talking about how Verizon can't be handing the goodies out like that, and speculation was building that they would collapse within months if not 1-2 years. I see a very similar trend and tell-tale signs with T-Mo and that's why I hold such strong faith about it. If the MASSIVE overhaul over the last year that T-Mo did, isn't proof enough that they can do it, I don't know what is.

posted on May 15, 2014, 7:32 PM 1

Posts: 64; Member since: Mar 15, 2013

yeah but it was cheaper back then and there was not any smartphones either, so not much data was bing used if any. today, it is all about data coverage, and who has the fastest speeds and the most coverage

posted on May 16, 2014, 4:50 AM 0

Posts: 194; Member since: Dec 03, 2011

That was a very different time though. There were still a ton of people that didn't have cell phones. There were so many new customers coming to the market. Now there aren't really any new customers. The market is saturated and its just companies trying to feed off of each other's scraps. So now a lot of the "subscriber growth" is coming from connected devices like tablets, home phones, mobile broadband, etc... This is something carriers have been pushing so hard just so they can show some growth in the market.

posted on May 16, 2014, 7:49 AM 3

Posts: 569; Member since: Dec 11, 2008

Network costs in the early 2000's what nothing near what they are today. Phones were much much cheaper and the LG V-series line was huge back them. VZW also didn't have to reply on failed acquisitions in order to have cash to spend. Instead, they were the result of two of the larger telco companies at the time merging (Bell Atlantic and GTE). Look at their financials from 10 year ago, they were still making money. Wasn't T-Mo $150 million in the red last quarter, yet added like 2.something million customers? VZW may have had deals as they came into new markets, but what are their deals now or 5 years ago? They've been one of the most, if not the most expensive carrier. They had to up their prices in order to make money and keep up with network coast, which is something T-Mo will need to do as well. If they up their prices then how to they draw in new customers? The network is still lacking in many areas. I work by the airport in Indy and only one person her has T-Mo and can't even make or receive calls here. All other carriers work just fine and get 4G data. You're crazy to think they can keep giving away the farm, still turn a profit, and have cash for the upcoming spectrum auction.

Posts: 832; Member since: Mar 08, 2009

posted on May 16, 2014, 3:06 PM 0

Posts: 5993; Member since: Dec 22, 2010

Break-up fee will tide them over for quite a while. Spectrum will allow them to add to their network footprint. The real risk is that Sprint slides to 4th place in number of customers. That is what Son-boy is trying to prevent by acquiring T-Mo. If there was a chance of being able to acquire T-Mo, Son-boy would sell his mother into slavery. Otherwise, all the $ he made in the Alibaba IPO goes poooof….

posted on May 15, 2014, 10:11 PM 1

that and att is now in talks with dish for a buy merger, if that happens both s and t will not be able to compete in any way due to the shadow or the 2 look at the commercial about verizon and tmobile in new york who would you choose. bigger name and company always win. they have the money to expand, and take risk

posted on May 15, 2014, 3:02 PM 0

Posts: 97; Member since: Mar 16, 2013

They won't fail, stop talking about things that you have no idea about. deutsche Telekom is their parent company if you didn't knew that, I'm sure they'll back them up not that they need it especially after gaining more than 2 million subscribers in one quarter. They are changing the industry and if you haven't notice everybody is trying to copy them but fail instead. Their stock prices are going throw the roof, they making more revenue than ever and all they need left to compete with the big 2 is that 600 MHz spectrum and they are set. Please go troll somewhere else.

Posts: 64; Member since: Mar 15, 2013

posted on May 16, 2014, 4:38 AM 1

Posts: 15; Member since: May 19, 2014

lmao I love how you insult someone else saying they don't know what they are talking about, when you sir are the one with no clue. With the Merger of T-mobile and Metro Deutsche Telekom is no longer involved. In fact if you truly knew what you were talking about you would know that Deutsche Telekom had not been throwing money away at T-mobile for years. T-mobile has had to stand alone. Why do you think T-mobile merged into Metro? Oh let me guess, you probably think T-mobile took over Metro because Metro decided to keep the T-mobile brand name lol.

posted on May 19, 2014, 1:52 PM 0

Posts: 2458; Member since: Nov 28, 2009

Funny thing is, if Sprint buys T-Mobile, they will officially be sitting on more spectrum then anyone else.
If this goes through, I hope they are forced to divest a ton of it, as Sprint has no clue how to use any of it properly as of now.
I wouldn't mind it if Dish got some of it and got moving.
Where I'm at, we only have Verizon and AT&T, and one may work where the other doesn't and vice-versa. Alot of us carry phones from both carriers due to these "issues". A lot of these issues are going on because the FCC is playing off of decades-old laws written for analog tech. Due to laziness, stupidity, or fat pockets (all bullsh*t), these laws have never been rewritten. I would love to see Sprint, T-Mobile, a merged Sprint/T-Mobile, or an entirely new company compete in my market. It sucks right now.

posted on May 15, 2014, 1:04 PM 1

Posts: 569; Member since: Dec 11, 2008

Great point! If the deal is somehow approved it would make sense that the FCC requires them to divest "x" amount of spectrum. Then Dish can come in and purchase some so they can get a nationwide network and/or wireless broadband running that would put us back at 4 major carriers and add give the Comcasts and AT&Ts some competition.

posted on May 15, 2014, 2:44 PM 2

Posts: 1043; Member since: Sep 28, 2013

posted on May 15, 2014, 3:23 PM 1

Posts: 569; Member since: Dec 11, 2008

No problem, you did have me second guessing myself for a second. With the AT&T DirecTV merger, that will probably be approved, we need a decent 3rd option. I had Dish a few years ago but they offered expensive and slow internet at the time so now I have to puddle jump from Comcast to AT&T when my promo rates end.

posted on May 15, 2014, 3:03 PM 1

Posts: 6; Member since: May 09, 2014

posted on May 15, 2014, 1:05 PM 0

Sure they have snatched up new customers (including me), but at what cost? This strategy is not a viable long-term one.
But at least I know why Son was pushing ahead with the talk of a merger....he had to have gotten some favorable response from some corner.

posted on May 15, 2014, 1:14 PM 2

Posts: 22; Member since: Jan 18, 2014

Looking at it from a number game, Tmobile has gained a lump sum fast. If we were to look at the financial side of it, I'd say he has lost a good chunk of money to do it and this particular strategy will not last. Unless Legere chooses to shake the hell out of the wireless industry then go out knowing he has made a major disruption to benefit the American People. Right now, He's still #4 so what does he have to lose?

posted on May 15, 2014, 1:26 PM 2

Posts: 22; Member since: Jan 18, 2014

As a long time subscriber to Sprint, I think this merger would add great value to both companies and open up a lot of opportunity for 3. Sprint & 4. T-Mobile to be competitive to the majority marketeers 1. Verizon 2. AT&T.

posted on May 15, 2014, 1:18 PM 0

Posts: 1043; Member since: Sep 28, 2013

posted on May 15, 2014, 1:20 PM 0

Posts: 70; Member since: Oct 04, 2013

T-Mobile's numbers are not good finacially and John's leadership might add customer but lose money. Investors won't like that. And I'm gonna be interested to see the churn numbers as well. Honestly Dan Hesse has turned Sprint around 180 degrees since he has taken over. I have Spark in my area and love it! And I want a contract option. The bottom line is you save money by signing the contract and don't need or want to change my phone once a year. The any mobile, anytime features on the everything data plans was a game changer. More than Fav Five. I've had both and worked for both companies. I'm just not a fan of John, but would love to have him stay in a role at the combined companies. But I seriously doubt this merger will happen. The public doesn't want it. You can go to any phone news site and look at the comments and the internet has a lot of disdain towards Sprint. Some of it earned, some of it based of lack of knowledge concerning Wimax and unused spectrum.

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